It is the fourth consecutive decline in Germany’s most important economic barometer and the lowest level since January. The German economy is coming under increasing pressure, according to the Ifo.
The mood in the German economy deteriorated again in September. The Ifo business climate fell by 1.2 points to 85.4 points, the Ifo Institute in Munich announced. This is the fourth consecutive decline in the most important German economic barometer and the lowest level since January.
Economists had expected a further dampener in sentiment, but on average had assumed a weaker drop to 86 points.
“The German economy is coming under increasing pressure,” commented Ifo President Clemens Fuest. Companies were less satisfied with current business in particular. In the manufacturing sector, sentiment had fallen to its lowest level since summer 2020, said Fuest.
The approximately 9,000 companies surveyed by the Ifo Institute again rated the prospects for their future business as worse overall. The assessment of the current situation was also weaker than in the previous month.
“Core sectors of industry in difficulties”
Companies were less satisfied with current business in particular, said Fuest. In the manufacturing sector, sentiment had fallen to its lowest level since summer 2020 and the lack of orders had worsened. “The core sectors of German industry are in trouble,” warned the economist.
In addition, the mood in the service sector and in trade has also worsened. The only bright spot is the construction industry, where the sentiment indicator has increased, it said.
Economist: Consumers and companies unsettled
From the perspective of Dekabank chief economist Ulrich Kater, both consumers and companies are feeling uncertain. He sees the reason for the gloomier mood in the recent bad news from important German companies, “divisive politics” and low foreign demand.
According to Thomas Gitzel, chief economist at VP Bank, the German economy is not doing well. “German industrial production is in one of its most severe downturns since the end of the Second World War,” said Gitzel. German gross domestic product is likely to shrink more frequently in the coming quarters.
Source: Stern
